What You Need to Know About Settling Car Insurance Claims

By Desiree Baughman
Desiree maintains insurance licensure in 46 states, and by combining years of experience as a writer and insurance professional, she delivers information consumers can easily relate to and understand. A graduate of Sweet Briar College with a diverse writing portfolio, she regularly serves as an expert source and commentator for respected outlets like CBS Money, Bankrate, and Ragan.com.

What You Need to Know About Settling Car Insurance Claims
Whenever you file a car insurance claim to cover losses due to damages to the vehicle or to yourself, you’ll soon find yourself entering into a settlement negotiating process. Unfortunately, many drivers don’t look at this negotiating process as an opportunity to negotiate though. Although adjusters expect policyholders to haggle prices a little bit, and are often surprised when someone accepts their very first offer, many often accept one of the very first offers without trying extremely hard to receive the payout that he or she actually deserves.

Fortunately, knowing how the claims process works, what the insurance claims adjuster can and cannot do, and steps to take to ask for more money can greatly increase your odds of a successful insurance claim. However, there’s something critical every policyholder needs to know first before beginning the claims process and agreeing to a settlement.

The Claims Adjuster Is Not Your Friend

You need to know this upfront — the adjuster is not your friend. He or she does not work for you. They may seem sympathetic, fair, and giving at times, but adjuster works for the insurer and has the company’s best interest at heart – not yours. The adjuster’s main job is also to settle any claim as quickly as possible for a few reasons:

  • The insurer wants to pay out as little on claims as possible to keep money in the insurer’s coffers.
  • The longer it takes to settle the claim, the more time your injuries have to develop into something worse than they initially were. For example, what started off as neck pain may turn into a disabling whiplash injury, a bruise may become a permanent scar, etc. This means more money paid out by insurers.
  • The more time you have to ponder the claim, the more likely you’ll contact a lawyer for further assistance and take legal action.

Adjusters may seem villainous for this, but this doesn’t mean you should treat your claims adjuster like the enemy. It’s important to know though how to speak to your claims adjuster though, which brings us to…

Speaking With Your Claims Adjuster

When speaking with an adjuster, be extremely careful about everything you say. Even responses to common greetings like, “How are you?” could be misconstrued. In their eyes, when you reply with the common every day response of “fine”, the adjuster will note “claimant says he is feeling fine” in their report, which can affect your claim’s settlement amount.

Additionally, remember that recorded statements are a huge part of the claims process. Generally speaking, whenever a claims adjuster asks to record a conversation, politely decline and seek legal assistance. Not only may you say something to unintentionally reduce your settlement, but adjusters often try coercing you into saying something that can be damaging to your claim as this “evidence” will be caught on tape. Advise the adjuster that you’d be happy to discuss your case informally, but that if anything formal will be recorded, you’d rather speak with a lawyer first.

Lastly, don’t downplay your injuries. As much as we’re taught to “grin and bear it” in many situations, now is not the time. Politely advise the adjuster that you’d like to seek legal counsel if there are injuries involved.

How Value is Determined & 5 Ways to a Better Settlement

You also need to know how claims adjusters determine the value of your car. Many car owners mistakenly think adjusters use a standard car pricing service like Edmunds or Kelley Blue Book (KBB) to value cars, but this isn’t always the case. Most insurance companies use their own proprietary database of car values or enlist the help of a third party private firm to determine a car’s actual cash value (ACV), which is what a policyholder would be paid if their car was a total loss. Many times these values may not be the same found in standard consumer sources like KBB.

So how do you challenge your adjuster’s valuation then? Most adjusters don’t think you’ll do so, but there are a few ways to.

#1: Don’t Take the First Offer

Many policyholders don’t realize that adjusters have a little bit of reasonable negotiation room — but not much. You may be able to ask for $500 more on your claim settlement with no problem, but if you ask for too much more than that, it will take higher level approval, delaying your claim even longer. Not only should you not take the very first offer, you should try ensuring you’re getting what you deserve, which may take a few rounds of offers without settling easily.

#2: Provide Reasons

You have to provide good reason as to why your car is worth more than what the claims adjuster says. Did you have a lot of high performance parts installed in the car? Did you have a lot of additional features not previously reported? These are just a few reasons why you may be able to justify a higher price from your car insurance company for your claim.

#3: Hire an Independent Appraiser

Car owners have the right in most states to hire an independent automobile appraiser to show why their car is worth more than the adjuster’s value. This is an expensive option and can cost $400 or more by a reputable firm. However, if, for example, you have a classic car worth tens of thousands and you receive an incredibly low offer from your insurer, hiring an independent appraiser may be money well spent in the long run.

#4: Reduce the Number of Comparables

Like buying a new home, auto insurance claims adjusters use comparables or comps to determine the value of a car based on make, model, year, mileage, and other features. Most insurers have a policy to average the comparables together in order to find the price of your car. If your insurance claims adjuster uses ten comparables, your average price may be skewed. Ask the adjuster to use only the three highest comparables when computing your car’s average.

#5: Ask For Your Car to Be Totaled

You’re probably asking yourself, “What?” But in certain scenarios, this may be wise to do. If the damage to your car is close to 50 percent of its value, you may be able to ask the auto insurance claims adjuster to classify your car as totaled. While you likely won’t receive the entire KBB value, you’ll receive more money in the end to help you either pay off your car loan or put a down payment on another. Additionally, depending on the car’s damage and the laws of the state you live in, you may even be able to keep the vehicle with a salvage title and continue driving it if it can be repaired.

When the Adjuster Won’t Budge

But what happens when you reach an impasse and the claims adjuster just won’t budge?

  • Start Climbing the Chain of Command: Speak to your adjuster’s manager. These individuals have far greater authority in managing your claim’s value, giving you a better opportunity to prove how much your claim is really worth.
  • Enter into Alternative Dispute Resolution: Insurance companies offer mediation or arbitration through a third, unbiased party, which you can take advantage of to get what you want.
  • Hire an Attorney: Depending on the complexity of the case, hiring a lawyer to handle your claim can be your best shot at receiving a fair settlement.
  • File a Complaint: Your state’s Department of Insurance will be particularly interested in hearing about your case if you think the insurer is trying to low-ball you in bad faith.

Speeding Up the Negotiation Process

There’s no telling how long the settlement process may take. In some cases, it can take a matter of days. In others, it can be months of back and forth negotiations and mediation. While you can’t force your adjuster to speed up the process, there are things you can do to help:

  • Stay in touch with your adjuster: You likely won’t need to call them on a daily basis, but don’t just sit back and wait for an offer. Stay in touch every few days to ensure your claim stays on top of their pile.
  • Ask for better service: If you find yourself having trouble with the adjuster or feel as if you’re getting the “run-around”, ask to speak with their manager or supervisor.
  • Seek Legal Assistance: If you’re desperate to settle your claim, an attorney will likely be the best route. He or she can force the issue by writing a final settlement letter threatening legal action and also be able to advise you when you may need to file a lawsuit.

Navigating claim settlements can be difficult, tedious, and frustrating. As aggravating as the process may be though, be willing to work with your insurer. If you find you’re not getting anywhere with the adjuster, now know what options you have.

Insurance companies are like every business – they’re out to provide service to their customers and make profit. Claims adjusters are an insurer’s eyes, ears, and often the last line of defense to keep profit intact. However, you alone are your only defense in getting what you deserve and keeping your finances intact.